TSTR Tri-star Resources Plc

 
TIDMTSTR 
 
Tri-Star Resources PLC / AIM: TSTR / Sector: Natural Resource 
 
3 January 2019 
 
             Tri-Star Resources plc ("Tri-Star" or the "Company") 
 
                                Update on SPMP 
 
Tri-Star Resources plc (AIM: TSTR), the minerals processing company, announces 
an update on its investment in Strategic & Precious Metals Processing LLC 
("SPMP") an antimony and gold production facility in the Sultanate of Oman in 
which the Company holds a 40% equity interest. The other joint venture partners 
are The Oman Investment Fund (40% equity holder) and DNR Industries Limited, 
part of Dutco Group in Dubai (20% equity holder). 
 
Funding of Tri-Star 
 
As previously announced, SPMP has been in the process of seeking further 
financing in order to ramp up operations at its antimony and gold production 
facility in Oman, targeting 100% capacity by the end of 2020 and securing its 
long- term operation.  The board of SPMP has determined that in order to reach 
100% capacity and sustainable positive cash flow, SPMP will eventually require 
up to USD160 million of additional finance, including a working capital 
facility of USD60 million to fund a build-up in inventories, a normal creditor 
and debtor cycle, the continued investment in the plant and to meet current 
debt obligations. 
 
SPMP has considered several different combinations and types of finance 
including debt, mezzanine and equity funding and although negotiations with 
various potential providers of finance continue, the terms offered to date are, 
in the view of the board of Tri-Star, unacceptable.  It is also the board of 
Tri-Star's view that any such provider of further finance to SPMP will require 
comfort that the total funding required of up to USD160 million is available 
prior to confirming its individual commitment to the funding package. 
 
Accordingly, whilst negotiations are ongoing, there is uncertainty as to 
whether SPMP will be able to achieve the financing it requires on a timely 
basis and, if it is able to secure such financing, the terms on which it would 
be made available.  As a result, the long term future of SPMP will remain 
uncertain until any such financing is secured. 
 
Negotiations between the shareholders of SPMP continue as to how to provide 
short term financing to SPMP in order for it to continue its operations.  No 
agreement has yet been reached.  However, the various outcomes might include 
the dilution of Tri-Star's share-holding in SPMP (as a result of the financial 
contributions of other shareholders) and the temporary suspension of operations 
at SPMP. 
 
Tri-Star will update the market as negotiations progress. 
 
SPMP's bank loans 
 
SPMP is currently in technical default of its current banking facility 
arrangements with Bank Nizwa and Al Aziz Bank as the most recent repayment 
obligation has not, as yet, been met.  The short term funding arrangements 
referred to above are intended to remedy this default. 
 
As part of the current SPMP facility arrangements, on 15 March 2018  each 
shareholder in SPMP entered into a conditional completion guarantee (the 
"Guarantee") in favour of Bank Nizwa and Al Aziz Bank. Tri-Star's obligation 
under the Guarantee amounts to 40% of SPMP's liabilities outstanding to these 
two banks, which currently stands at approximately USD30 million (out of a 
total owed of approximately USD75 million).  Tri-Star's obligations under the 
Guarantee fall away once commercial production of SPMP's facility in Oman has 
been achieved. The board of Tri-Star believes this now to be the position as it 
has been informed by SPMP that commercial grade antimony has been produced (as 
announced on 18 November 2019) and commercial grade gold dore  has been 
produced and sold.   The Guarantee will be formally discharged once an 
independent consultant certifies to the banks that commercial production has 
been successfully started. 
 
Certain information contained in this announcement would have been deemed 
inside information for the purposes of Article 7 of Regulation (EU) No. 596/ 
2014 until the release of this announcement. 
 
                                   **ENDS** 
 
For further information, please visit www.tri-starresources.com or contact: 
 
Tri-Star Resources plc                                              c/o SBP 
David Facey, CEO/ CFO                              Tel: +44 (0)20 7236 1177 
 
St Brides Partners (Financial PR) 
Isabel de Salis / Beth Melluish                    Tel: +44 (0)20 7236 1177 
 
SP Angel Corporate Finance (Nominated 
Adviser)                                           Tel: +44 (0)20 3470 0470 
Robert Wooldridge / Jeff Keating 
 
finnCap Ltd (Broker) 
Scott Mathieson / Camille Gochez                   Tel: +44 (0)20 7220 0500 
 
Notes to Editors: 
 
Tri-Star's principal interest is in an antimony and gold production facility 
(the "SPMP Project"). The SPMP Project is based in Sohar, Sultanate of Oman, 
and is being developed by Strategic & Precious Metals Processing LLC ("SPMP"), 
an Omani company in which Tri-Star has a 40% equity interest. 
 
 
 
END 
 

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